Apple fires Chinese supplier for using underage workers

Also reported company to the government for illegal labor practices.

When you go from six active cases of underage labor to 74 in one year, you know something's wrong. That's what Apple discovered after conducting its 2011 audits as part of its annual Supplier Responsibility Report, which was released late Thursday. In the report, Apple once again detailed its audit process and spelled out its findings, conducting a new high of 339 audits across its manufacturing partners. But the huge jump in underage labor wasn't across the board—it was concentrated in a single circuit board manufacturer, which Apple says was willfully conspiring with families to forge age-verification documents.

According to Apple's new report, the company didn't find any cases of underage workers at its final assembly suppliers in 2012, but it plans to continue going deeper into the supply chain to ferret out violators. These suppliers have apparently told Apple that it's the only company performing such audits.

That much is clear when you get to the part of the report where Apple slams Guangdong Real Faith Pingzhou Electronics Co. (also known as "PZ"). The company produces circuit board components "used by many other companies in many industries" and was found to have 74 cases of underage workers as of January 2012. Apple discovered that PZ was working with one of the area's largest labor agencies to actively recruit and work with underage workers to fake the appropriate documents to make them appear older than they actually were.

As a result, Apple terminated its relationship with PZ and reported the labor agency (Shemzen Quanshun Human Resources) to the provincial governments of Shenzen and Henan. "The agency had its business license suspended and was fined. The children were returned to their families, and PZ was required to pay expenses to facilitate their successful return," wrote Apple. "In addition, the company that subcontracted its work to PZ was prompted by our findings to audit its other subcontractors for underage labor violations—proving that one discovery can have far-reaching impact."

Last year, Apple reported that it found only six active and 13 historical cases of underage labor among its suppliers in 2011—down from 91 total cases found in 2010. Because of these discoveries in recent years, Apple has ramped up its education efforts, helping suppliers identify fake IDs and giving suppliers the names of labor agents that "have been associated with the recruitment of underage workers."

When new violations are found, Apple requires its suppliers to return the workers back to a school chosen by the family and finance their education. "In addition, the children must continue to receive income matching what they received when they were employed. We also follow up regularly to ensure that the children remain in school and that the suppliers continue to uphold their financial commitment," wrote Apple in its latest report.

Apple has come under fire in recent years for its suppliers' labor and safety practices after the publication of a 2006 report highlighting poor conditions, followed by another in the New York Times in early 2012. The latter prompted Apple to become the first technology company to join the Fair Labor Association (FLA) in order to check its own reports against independent audits. The FLA's audits began in February of 2012, followed a month later by a report that revealed more than 50 violations of FLA standards and Chinese law, largely related to the way overtime was handled among employees. But as of August, the FLA reported back to say that Apple and Foxconn (in particular) were indeed improving factory conditions and were actually ahead of schedule in implementing the recommendations from the FLA.

"Our verification shows that the necessary changes, including immediate health and safety measures, have been made," FLA CEO Auret van Heerden said in August. "We are satisfied that Apple has done its due diligence thus far to hold Foxconn accountable for complying with the action plan, including the commitment to reform its internship program."

In addition to the underage labor violations at PZ, Apple's report highlighted its efforts to source conflict-free materials for its products, improve worker safety, and increase training to identify safety hazards. Apple also says it interviewed and surveyed 70,000 workers across its four final assembly facilities in order to see what the workers wanted improved the most—the results showed "opportunities for improvement" in social support, quality of sleep and dining, work-supervisor relationships, and counseling services.

"As a result of our worker surveys at all of the facilities in this pilot, suppliers have taken specific actions, such as changing food vendors, tracking cafeteria food purchases to provide feedback to food vendors, evaluating the impact of room-darkening window shades in dormitories, assigning workers to dormitory rooms based on shift times, and changing security providers for increased coverage," wrote Apple.

Because it doesn't get people to click on the articles and comment and increase page views. But anything with Apple in the name gets people to immediately launch into diatribe mode without reading the article. Or to start lambasting apple about it not being enough, even though no other manufacturer does it.

"I live in Bangkok and see poverty ever day, far worse than anything in the US. "

I'm guessing you've never been back in the hollars of Southern Appalachia where I'm from or seen people living under bridges or over passes in our cities?

Appalachia ... the issues in Appalachia and a lot of other Southern poverty stricken areas actually are really not that different from a lot of the poverty in Western China - same sorta deal - old school values and agrarian economy.

When assessing poverty one must look at both degree and scale. Yes, I can find a single individual in the US who is as unfortunate as someone anywhere else, but the question is how many both in gross terms and as a percentage of the total population. Americans such as you do not really comprehend poverty. When you show me vast swaths of Americans with leprosy, shitting in open sewer systems in the middle of the road, we can talk. The poverty level in the US is what? less than $11,000 per year? Do you what the per capita income is of China? $5k. Lets not talk about Somalia ($112/year). Large portions of the world population would not consider denizens of Appalachia to be poor.

Your comment and that of some others here is that of a clueless imbecile, and one that needs to be corrected.

So your saying that poverty in another country that is condoned by and un-aided by its own government is the fault of the U.S. ?

Poverty is a bad thing, no matter where its at. However, why should we be blamed when another country's government does everything it can to maintain that poverty by clinging to ineffective methods of addressing such poverty, or simply ignoring it, while at the same time refusing help from other countries and taking any help that does arrive and converting it into a government benefit instead of a people benefit. Having been to Somalia, I can tell you, and i'll be as nice as possible when I say this because it really enrages me and I want to cuss the crap out of you for making such ignorant comments, that the governments only concern is not for their people but rather for their own butts, so yeah, lets not talk about Somalia where I saw on 75 different occaisions food and medical supplies intended for the poverty striken and sick taken and given away to the military for their use by government order.

No I'm not saying that. How can you possibly infer that from what I wrote?

Because of your comments only considering income and then trying to draw comparisons to Americans when thats not the problem at all. China, for example, purposely kept the people in a poverty state as a means to supply cheap dominated labor, to control them, and keep them dumb as to the outside world, and to make them totally dependant on the state under communist rule as a means of continual indoctrination of past and future generations. Yet you for some reason have this "imagined wrong" fairy tale notion that the reason for poverty is per capita income in relation to the U.S. and pretend like thats the problem when in reality its the government of those countries. Then you want to imply its the fault of the U.S. and call others ignorant of the subject when you don't have the slighest idea yourself. These people in poverty in other countries have swaths of leprosy and are shitting in open sewer systems in the middle of the road because their goverments are not doing anything to improve things, not because we Americans have more capita income. So you want to complain about it or blame someone, then don't blame the U.S. and try to draw useless comparisons as a means to have someone to blame and take out agnst and anger on, instead you should be looking at the governments of those countries. Thats how I infered it, because you said it by implying it.

So where's the outrage against Dell, HP, and other companies that have used these suppliers, but apparently weren't conducting audits like this?

That's the thing I don't understand. Everyone pretty much manufactures in China these days, but Apple is the only one who gets consistently nailed to the wall about it.

Probably because whereas other manufacturers pass on the cost margin savings for a budget price Apple has such grotesque margins that they could easily afford to do at least a portion of their manufacturing domestically.

Apples *NET* margins are slightly below Microsoft and Google. So do they also have grotesque margins?

Considering MS and Google aren't hardware vendors you should probably go back and find another two vendors to compare Apple with.

Xboxes, Microsoft mice and keyboards plus most Google Nexus devices are all assembled in China.

So where's the outrage against Dell, HP, and other companies that have used these suppliers, but apparently weren't conducting audits like this?

That's the thing I don't understand. Everyone pretty much manufactures in China these days, but Apple is the only one who gets consistently nailed to the wall about it.

Probably because whereas other manufacturers pass on the cost margin savings for a budget price Apple has such grotesque margins that they could easily afford to do at least a portion of their manufacturing domestically.

Apples *NET* margins are slightly below Microsoft and Google. So do they also have grotesque margins?

Considering MS and Google aren't hardware vendors you should probably go back and find another two vendors to compare Apple with.

Xboxes, Microsoft mice and keyboards plus most Google Nexus devices are all assembled in China.

Dell/HP and the like aren't excused, it's simply that rationally they're attempting to compete at least on price, so using the cheapest labor possible is understandable.

I think we're totally on the same page here, but to be clear: "understandable" doesn't make it any less "excusable," at least to me. I'm sure "Very Large International Computer Company, Inc." could sell top-quality laptops for $100 if only they used actual slave labor, chained to a workstation, beaten with whips, and paid nothing. I don't think anyone would say, "well, but they're so cheap so it's understandable." It's levels along a continuum, but all of it is wrong.

Not bothering to look at your link, but could you just go ahead and look up the MS entertainment division profit margins (that is the division that contains the Xbox if I recall correct) for us?

Just so we can get an apples to apples comparison, you know.

As for the Nexus, last time I checked those were made by companies other than Google and sold by Google at very low margins.

So it is ok for other companies to use child labor through companies they contract. That is essentially what you are saying. It is cheap therefore it is ok for us to ignore how it was made. Your position has a few flaws in it.

Also you aren't even reading the linked article, why should we have to do your work for you about how much money the ms entertainment division makes? Look it up yourself, you have google. We aren't going to make your own argument.

Not bothering to look at your link, but could you just go ahead and look up the MS entertainment division profit margins (that is the division that contains the Xbox if I recall correct) for us?

Just so we can get an apples to apples comparison, you know.

As for the Nexus, last time I checked those were made by companies other than Google and sold by Google at very low margins.

So it is ok for other companies to use child labor through companies they contract. That is essentially what you are saying. It is cheap therefore it is ok for us to ignore how it was made. Your position has a few flaws in it.

Also you aren't even reading the linked article, why should we have to do your work for you about how much money the ms entertainment division makes? Look it up yourself, you have google. We aren't going to make your own argument.

Enough of this red herring. I'm not making a value judgement to the manufacturing policies of any of the companies you mentioned.

The point that roared past was that both Microsoft and Google are hardware vendors. I hadn't even included the Surface, or Motorola in my list.

No, that's like saying that apple is an advertising agency.

Whatever is the majority of a corporation's business is the kind of business they are.

Apple is a hardware vendor. Google is an information services company. MS is a software development company.

Soooo, they don't really sell Xbox, Surface, keyboards and mice? Microsoft is primarily a software company that also sells hardware. Apple is primarily a hardware company that also sells software. They both however sell hardware, Apple just sells more of it.

But anything with Apple in the name gets people to immediately launch into diatribe mode without reading the article. Or to start lambasting apple about it not being enough, even though no other manufacturer does it.

So, what is the legally acceptable work age in China? Is this company violating Chinese laws, or far stricter American laws? Does an American company operating in China have a legal obligation to fulfill Chinese legal obligations, or Chinese and American obligations? No, don't give me your OPINION, tell me known facts. If Apple is obliged to follow only Chinese laws while hiring Chinese employees, then if they following American laws, this is unnecessary on their part. Please, don't propose that American laws are more righteous than Chinese laws. There is no moral foundation for our laws, in this area, strictly a long-term preferrence which has become tradition, and then law here. Sure, schooling is better, but morally speaking we do NOT have an obligation to do that. Yes, each individual family does want the best for their children, and I do honestly applaud that desire, but it is a preferrrence, not a moral obligation. Honestly, some people don't care about education, and some women still like to stay at home, while some love to work. It's all just personal preferrences, but when we raise a mutually held preferrence to the status of a law, we ARE becoming dictatorial against those few who don't WANT to be forced to do what WE think is best for them. This applies in so many other areas, too.

Not bothering to look at your link, but could you just go ahead and look up the MS entertainment division profit margins (that is the division that contains the Xbox if I recall correct) for us?

Just so we can get an apples to apples comparison, you know.

As for the Nexus, last time I checked those were made by companies other than Google and sold by Google at very low margins.

So it is ok for other companies to use child labor through companies they contract. That is essentially what you are saying. It is cheap therefore it is ok for us to ignore how it was made. Your position has a few flaws in it.

Also you aren't even reading the linked article, why should we have to do your work for you about how much money the ms entertainment division makes? Look it up yourself, you have google. We aren't going to make your own argument.

Enough of this red herring. I'm not making a value judgement to the manufacturing policies of any of the companies you mentioned.

Then what exactly are you arguing? Apple makes more profit therefore %profit means they should do %more audits? You haven't stated much of an opinion or platform with your comments. And you're basically just ignoring any responses.

Because it doesn't get people to click on the articles and comment and increase page views. But anything with Apple in the name gets people to immediately launch into diatribe mode without reading the article. Or to start lambasting apple about it not being enough, even though no other manufacturer does it.

Basically because humans suck at scope and where we direct outrage.

I dunno - I think Samsung at least is high enough profile that their bad behaviour could be shamed. Maybe the difference is that Apple is a U.S. company and most of these other ones are in Korea and China - in which case I would *hope* that their media also shames their bad practices and for whatever reason our media isn't picking up on it...

Ethically, I think Apple is far out in the front here and if my smartphone purchasing decisions were based purely on the ethics of their supply line I think Apple would win (however, we all know that, generally speaking, there are many other considerations that come before this such as spec and price). I'd like to think I'd pay more for a ethically produced decent Android phone, but there's so little information that it's hard to know what that would be :S

Big points in Apple's favour there. I am not a huge fan of Apple, especially with their recent foray into heavy litigation. A lot of people bash Apple for their price premium, but if the premium includes a guarantee that they are operating in a transparent and socially responsible manner, we'll, that's definitely something I could get into.

I wonder what the track records are for other computer companies like Lenovo, HP, or Dell?

IIRC few years back when Apple started doing these audits and publishing their results, the CEO of HP (not sure who it was back then) voiced his concern in an interview, saying that audits like the ones Apple was doing was a bad thing, since it would drive up the cost of manufacturing in China...

I'm not saying it's a GOOD thing to ignore it when this goes on, but I think Apple is going above and beyond in this situation. You can't expect companies to follow this as a standard unless a ton of pressure is put on them by the government.

The point that roared past was that both Microsoft and Google are hardware vendors. I hadn't even included the Surface, or Motorola in my list.

No, that's like saying that apple is an advertising agency.

Whatever is the majority of a corporation's business is the kind of business they are.

Apple is a hardware vendor. Google is an information services company. MS is a software development company.

Soooo, they don't really sell Xbox, Surface, keyboards and mice? Microsoft is primarily a software company that also sells hardware. Apple is primarily a hardware company that also sells software. They both however sell hardware, Apple just sells more of it.

Actually, the point that was roared past was that the original post was comparing margins of Apple to MS/Google. You can't do that. Software (like Hardware) has initial engineering effort. However, unlike Hardware, once it's developed, it's basically free to replicate. So for example, it could cost $10,000 to develop. But once it's developed, the cost to produce 10,000 copies or 100,000 copies is the same. Thus your margins are going to be higher... Hardware on the other hand, the cost to produce scales up with volume, because you have to build/acquire/assemble various components.

That's why you can't compare a HW company's margins to a SW company's margins. Just because MSFT sells Xboxes (at a loss for quite some time mind you), or that Google acquired Motorola Mobility (for their patents not for their phones), doesn't magically make them HW companies... That's like pointing to a Lexus dealer, and pointing out the candy they have in jars that they give their customers... Wow, Lexus is a candy store too! And they have rediculously high margins on their candy! They bought 1/2 case of candy at cost, and their net profit for the year was in the millions!!!

Apple is a Vertical solutions company, no ifs and or buts. MSFT and Google are not vertical companies, they are horizontal solutions companies.

I applaud the effort, but wonder if this won't give perverse incentives to kids to try to get factory jobs and then get caught. They now get a free education plus a stipend!

The kids already had all the incentive they needed. They wanted to eat, for which they need money. That's pretty motivating, I think.

The only difference now is that the factory has an incentive to keep the kids out; if they got caught, they'd be stuck paying a worker for no work. The HR guy who let that happen would probably be fired in short order.

Big points in Apple's favour there. I am not a huge fan of Apple, especially with their recent foray into heavy litigation. A lot of people bash Apple for their price premium, but if the premium includes a guarantee that they are operating in a transparent and socially responsible manner, we'll, that's definitely something I could get into.

I wonder what the track records are for other computer companies like Lenovo, HP, or Dell?

IIRC few years back when Apple started doing these audits and publishing their results, the CEO of HP (not sure who it was back then) voiced his concern in an interview, saying that audits like the ones Apple was doing was a bad thing, since it would drive up the cost of manufacturing in China...

So where's the outrage against Dell, HP, and other companies that have used these suppliers, but apparently weren't conducting audits like this?

That's the thing I don't understand. Everyone pretty much manufactures in China these days, but Apple is the only one who gets consistently nailed to the wall about it.

Probably because whereas other manufacturers pass on the cost margin savings for a budget price Apple has such grotesque margins that they could easily afford to do at least a portion of their manufacturing domestically.

(How the heck does this ^^^ post accumulate so many negative votes? I assume most ARS readers are in the US. What is wrong with you people?)

Exactly!I couldn't care less about the "poor abused Chinese." Boo f-ing hoo!If Apple wanted to be truly 'revolutionary,' they'd move at least some production back to the US.

Apple only brags about it because people have been holding their feet to the fire over poor working conditions.

You probably missed the news from a couple of years ago that Apple was doing these audits long before the whole thing got so public. After all the negative publicity, they're clearly doing more, but they were already doing some, which is more than you can say for anyone else.

Someone mentioned Dell using off the shelf components - they don't. They use things *based on* off the shelf components, but they certainly commission and modify pretty much everything in their boxes; put it like this, you won't find a stock retail motherboard in any Dell machine.

I'm not personally worried about teenagers working if the number of hours they work is limited. I got my first real job shortly after my 16th birthday. My father grew up on a farm and I had less work to do when working outside the home than I did at home if I didn't have a job. I worked about 16 hours a week during the school year. It didn't interfere greatly with me getting decent grades, having a social life, and being ready for college. Having a job and learning to manage my time a bit probably helped me be considerably more prepared for college.

However, I doubt a part time job that doesn't interfere with school isn't what these Chinese kids are dealing with. Kids shouldn't get trapped into a full time job with no time to get an education. A part time job can help you prepare for adulthood. A full time one with overtime ends your childhood and greatly limits your future.

Wow. Super lousy, pathetic hypocrites. An "education" in most places is precisely worth *nothing*. Unless we're talking about some sort of prodigies, here, the best most people will ever be able to hope for is this sort of employment. I cannot express how painful it is to see so many of you failing to acknowledge reality.

So it's just better to not give them the opportunity at all? We should just condemn everyone over there to this kind of existence as soon as they can walk?

Because it doesn't get people to click on the articles and comment and increase page views. But anything with Apple in the name gets people to immediately launch into diatribe mode without reading the article. Or to start lambasting apple about it not being enough, even though no other manufacturer does it.

Basically because humans suck at scope and where we direct outrage.

I dunno - I think Samsung at least is high enough profile that their bad behaviour could be shamed. Maybe the difference is that Apple is a U.S. company and most of these other ones are in Korea and China - in which case I would *hope* that their media also shames their bad practices and for whatever reason our media isn't picking up on it...

Ethically, I think Apple is far out in the front here and if my smartphone purchasing decisions were based purely on the ethics of their supply line I think Apple would win (however, we all know that, generally speaking, there are many other considerations that come before this such as spec and price). I'd like to think I'd pay more for a ethically produced decent Android phone, but there's so little information that it's hard to know what that would be :S